Vietnam’s middle class is expected to double to 33 mil people by 2020, while growth is forecast at 6.7% in 2017, up from 6.2% in 2016.
Foreign investors pumped in an estimated USD15.8 bil into the country in 2016, setting a new record.
“Vietnam witnessed strong growth in FDI in 2016. This can be attributed to a strong economy backed up with political stability and relatively low labour costs when compared to the region,” says Stephen Wyatt, Country Head of JLL Vietnam.
“Manufacturing dominates FDI, accounting for 64%, while 7% of total FDI is attributed to real estate. The sector attracted USD1.53 bil in newly registered capital in 2016 with 59 newly registered projects.”
One of the factors cited often for the increase in real estate investment is the country’s relaxation of foreign ownership rules for real estate in 2015.
DEMAND UP FOR OFFICE, RETAIL AND HOTEL
In Ho Chi Minh City, the country’s tallest building, the Vincom Landmark 81 is under construction. Meanwhile, the Thu Thiem New Urban Area, a 657-ha site east of Saigon River, is earmarked to be the new central financial district. And last year, Takashimaya opened their first department store in Vietnam, within Saigon Centre, in HCMC, a mixed use development by Singapore’s Keppel Land.
In Hanoi, the office sector is also seeing high levels of development, according to JLL research, while a new urban living project Starlake Tay Ho Tay is being constructed by South Korean conglomerate Daewoo. Condotels and villas are also being built in secondary cities such as Da Nang to woo investors in the second-home market.
Vietnam’s burgeoning tourism industry, which welcomed 10 million visitors last year, is driving hotel developments. The Hoi An South Integrated Resort is currently being constructed, with its first phase to be completed in 2019; meanwhile Ha Long Bay got its first five-star property, Wyndham Legend Halong Bay, last June.
“There has been a lot of attention for major tourist locations such as Da Nang, Nha Trang and Phu Quoc in the last two years,” adds Wyatt.
Industrial real estate is also enjoying a boost. “Industrial parks in the North, South and Central regions are witnessing strong activity. For instance, the Long An province in southern Vietnam is experiencing strong demand for ready-built factories and industrial land.”
Vietnam’s upward trajectory looks set to continue despite the slowdown affecting other Asian countries. It posted GDP growth of 6.2% last year – a figure which is forecast to rise to 6.7% this year amid the growing affluence and higher consumption levels of the country’s middle class who are developing a taste for foreign brands from Starbucks to Louis Vuitton. Vietnam’s middle class is expected to double to 33 mil people by 2020 while HCMC is home to Southeast Asia’s fastest-growing middle class, according to Boston Consulting Group.